economy

Norway's Giant Investment Fund Plans to Sell Billions in U.S. Government Bonds

Norway's massive investment fund plans to sell $80 billion in U.S. government bonds and buy riskier mortgage debt instead, betting it can earn better returns.

By Piggy PressSep 4, 20262 min read

Photo via Fortune

In simple terms

When giant investors like Norway's fund sell U.S. bonds, it can affect interest rates in America—which ripples down to what you pay for mortgages, car loans, and credit cards. It also signals confidence (or lack of it) in U.S. finances when huge money managers shift where they park their cash.

Norges Bank Investment Management runs Norway's sovereign wealth fund — essentially a giant investment account that the Norwegian government built up using oil money. With $2.3 trillion in assets, it's the world's largest. This week, the fund's leaders told Norway's finance ministry they want to make a major change: sell about $80 billion worth of U.S. Treasury bonds (the safest form of government debt) and buy riskier forms of American debt instead, like mortgage-backed securities (loans bundled together and sold as investments).

The fund says this isn't about doubting America's ability to pay back its debts. Instead, they're pointing to the changing world around them. The U.S. has $40 trillion in total debt, the government is spending far more than it takes in, and the Trump administration's aggressive foreign policy — including trade wars and threats against allies — is making holding large amounts of dollar assets feel less safe. The fund wants a more diversified portfolio that earns extra returns from taking on different kinds of risk. After the change, U.S. Treasuries would drop from 34% to 22% of their government bond holdings, while mortgage-backed securities and other non-government debt would rise. The overall amount of money they keep in dollars would stay about the same.

Fun fact

Norway's sovereign wealth fund holds $2.3 trillion—that's roughly 30 times the annual budget of Norway itself. Most of this money came from oil profits over decades, invested globally. It's so large that when it moves money around, financial markets notice.

Economy

Source: Fortune